Aul's Estate v. Haden

• Court: West Virginia Supreme Court
• Writing for the Court: BERRY
• Citation: Aul's Estate v. Haden, 177 S.E.2d 142, 154 W.Va. 484 (W. Va. 1970)
• Decision Date: 20 October 1970
• Docket Number: No. 12927,12927
• Parties: In the Matter of the ESTATE of Marie S. AUL, Deceased, Wheeling Dollar Savings & Trust Company, Executor, etc. v. Charles H. HADEN, II, Successor to Clifford G. Lantz, State Tax Commissioner, etc.

Page 142

177 S.E.2d 142

154 W.Va. 484

In the Matter of the ESTATE of Marie S. AUL, Deceased Wheeling Dollar Savings & Trust Company, Executor, etc. v. Charles H. HADEN, II, Successor to Clifford G. Lantz, State Tax Commissioner, etc.

No. 12927.

Supreme Court of Appeals of West Virginia.

Submitted Sept. 8, 1970.

Decided Oct. 20, 1970.

Syllabus by the Court

1. In a case where United States treasury bonds belonging to a West Virginia decedent at the time of her death are appraised in West Virginia at New York market value and reported to the State Tax Commissioner at that value for use on inheritance tax return, but are valued on a federal estate tax return at the higher par or face value and are used by the executor under federal regulations to gain a credit on federal estate tax equal to the higher par value, the State Tax Commissioner of West Virginia must allow on the state inheritance tax return a deduction equal to the amount of the federal tax. He cannot reduce the estate tax deduction allowed in West Virginia by the difference between market and par values of the bonds and thereby produce a higher taxable base on the inheritance tax.

2. 'In determining the base for the application of the inheritance tax rates under Article 11 of Chapter 11 of the Code of West Virginia there should be deducted, inter alia, from the value of the property involved, the amount of the transmission tax, sometimes called estate tax, levied and collected by the federal government.' Syllabus, Central Trust Co. v. James, 120 W.Va. 611 (199 S.E. 881).

3. The market value is the price at which a willing seller will sell and a willing buyer will buy any property, real or personal.

4. The valuation placed on property of an estate by its appraisers is in West Virginia prima facie evidence of value, and the only method by which the State Tax Commissioner can have the value of any property of the decedent listed on the appraisement and inventory required to be filed under the provisions of Code, 44--1--14, as amended, and Code, 11--11--17, increased is to appeal to the circuit court of the appropriate county.

Chauncey H. Browning, Jr., Atty. Gen., James H. Coleman, Asst. Atty. Gen., Charleston, for appellant.

Schmidt, Laas, Schrader & Miller, Henry S. Schrader, Frederick P. Stamp, Jr., Wheeling, for appellee.

BERRY, Judge:

This is an appeal by the State Tax Commissioner of West Virginia, from a judgment of the Circuit Court of Ohio County of May 1, 1969, in which a deduction partially disallowed by the Tax Commissioner was reinstated to full value by the Circuit Court in a case involving the value of deduction to be allowed on the state inheritance tax return for estate taxes paid to the federal government where the government allowed bonds, which were appraised by West Virginia appraisers at market value and which were later placed on the federal return at their higher par value, to be used at the higher amount in the payment of the federal government taxes. An appeal from the judgment of the Circuit Court was granted by this Court on February 9, 1970, and was submitted for decision on arguments and briefs at the September, 1970, Regular Term of this Court.

The case originated by a proceeding brought by the executor of the estate of Marie S. Aul, Wheeling Dollar Savings & Trust Company, the appellee, against Clifford G. Lantz, State Tax Commissioner of West Virginia to reverse an assessment made by the Tax Commissioner for a higher tax than that computed by the executor. Charles H. Haden II, had become tax commissioner by the time this case was presented to this Court and he is also made a defendant.

The facts in this case are undisputed and are quite simple. Marie S. Aul, a resident of Wheeling, West Virginia, died testate September 8, 1967. Among her assets in the estate which totaled about one million dollars were United States treasury bonds totaling $76,000 at par or face value. However, since these bonds were not due for redemption for several years, they were selling on the New York bond market at a discounted price which totaled $64,383.13, amounting to $11,616.87 less than the par or face value.

Under certain federal government regulations various bonds and other obligations of the United States government may be used in an estate at par or face value to be applied on the federal estate tax if they are owned by the decedent at the time of death; and under the regulations governing such bonds and the decisions of the federal courts the personal representative, if he desires to use them in that manner, must include them on the federal tax return at the par or face value plus accrued interest.

The bonds in the instant case were surrendered to the federal government for redemption at a figure of $77,238.43 which included accrued interest. The executor in preparing the state inheritance tax return listed the bonds thereon at the market value which was also the value of the bonds placed in the original appraisement of the estate filed on Ohio County of which a copy was sent to the State Tax Commissioner. This resulted in the bonds being valued on the state return at $11,616.87 less than they were valued on the federal return. The State Tax Commissioner upon ascertaining this fact reduced the credit for the federal estate tax paid by the amount of this difference in value. This resulted in an increase of inheritance tax which the State Tax Commissioner claims was due in the amount of $602.14. The actual deficiency assessment on the entire estate was about two and one-half times that amount, but the remainder was due to a recomputation of age factors in connection with various life estates, and the extra amount of almost $1,100 was concurred in by...